]62 REPOET— 1889. 



of ratios, each weigJited by the amount usually paid in the corresponding 

 department. 



Moreover, since upon Ricardian principles the value in exchange of 

 commodities is proportioned to the ' comparative quantity of labour 

 expended on each,' there may be expected some correspondence between 

 the two expressions, not only as to their general form, but also as to the 

 constants which they involve, the weights with which the variations of 

 wages and prices are respectively to be affected. But the idea of such a 

 correspondence is marred by the fact that the denominations of finished 

 products do not coincide with the classification of wages. Also the sug- 

 gested analogy is vitiated by a circumstance which is of great theoretical 

 importance : that values in exchange — and accordingly the proportions 

 which form the weights of the Consumption Standard — depend not only 

 on quantity of labour, but also on interest, according to the different 

 degrees of durability of the capital employed in producing them. This 

 circumstance, as it creates a difiiculty ' with regard to Ricardo's first 

 principles, so it suggests a scruple about the method which is here con- 

 nected with those principles. When we ' hypothetically argue and 

 speak ' of an invariable commodity ' which at all times requires the 

 same sacrifice of toil and labour to produce it,' ^ should we include in 

 the idea of ' sacrifice ' not only bodily and mental labour, but also absti- 

 nence ? Shall we introduce into our Index-number the variation in the 

 rate of Interest, weighted by the total amount paid in the way of 

 Interest ? Or shall we follow the example of the great theorist himself, and 

 omit the consideration of Interest as often as convenience and rotundity 

 of statement and the purpose of a rough approximation may require ? 

 The management of these and other difficulties connected with the 

 Labour Standard must be resigned to the abler hand which has already 

 touched this part of the subject. 



Conclusion. 



In conclusion it may be useful to enumerate and summarily charac- 

 terise the principal definitions of the problem, or ' Standards,' ^ which 

 have been discussed in this and the preceding Memorandum. An alpha- 

 betical order will be adopted, the order of merit being not only invidious, 

 but also impossible in so far as difierent methods are the best for difi'erent 

 purposes. 



1. The Capital Standard takes for the measure of appreciation or 

 depreciation the change in the monetary value of a certain set of articles. 

 This set of articles consists of all purchasable things in exsitence in the 

 community, either at the earlier epoch or at the later epoch, or some 

 mean between those sets. This standard is due to Professor Nicholson. 

 It is stated by him (in terms a little less general than those here adopted) 



> Cf. Sidgwdck, Pol. Econ. Book I. ch. ii. ' It is rather a perplexing question how 

 Ricardo and M'Culloch could deliberately adhere to the statements above quoted 

 [that labour is the measure of the real value of things, &c.], while they at the same 

 time drew attention to the differences in the value of different products, due to the 

 different degrees of durability of the capital employed in producing them.' 



- Ricardo, loc. cit. 



^ The methods discussed in connection with the names of Jlr. GifEen, Mr. Bourne, 

 and Sir Eawson Rawson are rather solutions than statements of the problem. 



